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  • Writer's pictureRajvin Singh Gill

Companies Act 2016: Adopting a Constitution

Is it still advisable for a company to adopt a company constitution even though it is no longer compulsory?

Why is a Malaysian company's constitution important?

This legal document, previously known as the Articles and Memorandum of Association, outlines a company's objects and powers, and governs its internal affairs and management.

The constitution is also a contract that binds the company, its shareholders, and directors with covenants and procedures they must comply with. The constitution has a wider and more binding legal effect than a shareholders' agreement, which may not bind directors who are not parties to the agreement.

While it is no longer mandatory for a company to have a constitution under the current Companies Act 2016, without it, the provisions of the act would apply, making it important to have a tailored constitution to address specific situations.

Altering the constitution is done by a special resolution requiring a 75% majority vote, subject to certain restrictions, and should be done only for the benefit of the company as a whole. Provisions in the constitution should be tailored to address ownership, control, exit, voting rights, roles and responsibilities, dividend policy, reserved matters, access to information, and more, depending on the specific situation.

At Rajvin Gill & Co, we provide constitution drafting and review services. Contact us today to schedule an appointment to discuss your legal needs.


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